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"pending sales" are a leading indicator, not a measure of actual sales. don't beat up the author of the article over something that is clearly disclosed.
JG, honestly, this is the problem here. It is imperative when looking at sales/price data to consider whether the data reported is mom or yoy. As we all know, NAR likes to cherry pick data to present a rosy picture. I'm not going to hold that against them--it's in their best interest. The federal reserve does the same thing. However, I think we can see that it was NOT in the country's best interest to have continued the happy drumbeat that led us up and up over a massive cliff. So, IMO, here's what keeps happening. A report will come out that shows an increase in sales data and myself and others will shoot it down because these are MOM statistics. Honestly, that's what every single one of these articles does. They show an amazing MOM increase in some data point and act like that's not expected of ANY spring sales season. So what myself and others are correctly doing is putting those data points in perspective. You need to look at the YOY data to get a real picture of where we are against other years. It's not that the MOM data is useless--I myself conceeded that the increase in this month's sales data were higher than I expected. But this increase is not proof of a long term trend toward increased sales, let alone decreased inventory and leveling prices. It MIGHT be a step in that direction. For this to occur, the following would need to happen:
1) These sales will need to go through as completed sales: Myself and others are skeptical because of the length of time it's currently taking to complete the credit process and the difficulty in obtaining that credit. Additionally, many people in this prolonged period, are actually walking away from the contract as they see prices continue to decline. For this reason, I look at the larger than expected increase in pending sales with surprised skepticism.
2) Sales Volume will need to continue: Needless to say, if YOY sales volumes have indeed bottomed, this means that they are bottoming at a low level. If April 2009 numbers are basically on par w/ April 2008 numbers, which were in themselves a bottom, sales will then need to increase. As sales increase, inventory will continue to come down from still high levels. And yes, included in this inventory will be the shadow inventory we've talked about earlier.
3) Inventory will need to come down: As inventory decreases toward normal historical levels, prices will continue to drop.
4) Sales prices will continue to drop until sales rates and inventory numbers reach historical norms.
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"pending sales" are a leading indicator, not a measure of actual sales. don't beat up the author of the article over something that is clearly disclosed.
I've been misunderstood here. I certainly wasn't beating up on Lusitan here if that's what you mean. Maybe you're referring to someone else though. Either way, by posting data that relies on something so shaky as mom pending sales, I would expect people like myself and others to question the gravity of that data. I (and probably others) don't doubt that sales numbers may in fact be bottoming and may soon eclipse 2008 numbers. Where I personally would like some answers from the RE cheerleaders is on addressing my points above about the continued high inventory and currently decreasing prices for NY metro.
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irrational optimism was a problem during the peak, it's logical to assume there will be irrational pessimism as we tread up out of the valley.
the concept of pent-up demand seams pretty reasonible -- just because the economy is in the toilet doesn't mean all the irraltional girlfriends/wives out there don't want their white picket fences.
if I wasn't in the middle of all my primary residence projects, I would look into buying a foreclosure to rehab, I just don't need the headaches of another house right now.
I'll admit freely that there is pent up demand for housing. However, there is little demand for houses at current prices. This explains the pent up inventory of unsold houses and currently historically low sales numbers. Whatever pent up demand currently exists is far exceeded by the pent up supply.
Why bother rationalizing with this silly guy. He is in over his head and is just hoping prices rise so that he can get out over his head.
JG I am sorry for your situation.
I don't have the cite, but I read somewhere that 80% of pending sales follow thru to successful completion...
Then it must be so.. WTF!!!
I cite an article that lays out how Pending sales over the past 2
years (with statistics) have been all over the place but your "I don't have the cite 80% of pending sales complete" is gospel. You win...
I dont think you guys even care about home prices or real estate, you all just like to argue with each other.
I suggest we argue about a more interesting subject, how about the effect of the hadron particle collider, will it destroy earth in a blackhole!
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